Social Security Final

When thinking about retirement in America one of the first things that come to mind is Social Security. Unfortunately many Americans think that it is all they will need to retire, and will have no need to do any further financial planning, but of course this is false. The Social Security Act was passed back on August 14, 1935 and was created for old age work benefits, victims of industrial accidents, aid for dependent mothers and children, the blind, and the physically handicapped (2011). According to the Social Security Administrations website, there are currently around 36 million people in the United States that collect Social Security, and CNBC reports that there are currently almost eighty-million baby boomer who are getting ready to retire and become eligible for Social Security retirement (Reuteman, 2010) (2011).

Funds are paid into Social Security by the means of FICA (Federal Insurance Contributions Act). These funds are not put into a personal account for each person in America, but are being used by people now. The Social Security and Medicare Boards 2009 annual report states that by the year 2037 the money will be drained and people will only be able to collect seventy-five percent of the benefits that are owed (Reuteman, 2010). Some people do believe that this projection is false, and it is believed to be false because Social Security is funded by FICA and with recent depression and high rates of unemployment funding cannot keep up with the amount of people ready to retire. A red flag that people should also consider is that Social Security has also not received a cost of living raise for the past two years (2011).

A new article posted by the Associated Press reports that Social Security will post a $600 billion dollar deficit in ten years. This year alone it is projected to have a $45 million dollar shortfall because of the reduction in payroll taxes. The average benefits that are collected by the retired, disabled, and surviving...